This study examines the impact of exchange rate on inflation in Nigeria economy between 1970 and 2007. We analysed the trend of inflation and exchange rate in the last 38 years by evaluating the relationship between government expenditure, money supply, Oil revenue, exchange rate and inflation as the dependent variables. We adopted the Augmented Dickey- Fuller to carry out the unit root test and cointegration with Johansen test. Our result shows that the individual variables are integrated order one, that is a unit root exist. This means that each variable tends to follow a random walk. On the other hand, inflation rate, exchange rate, oil revenue, government spending and money supply are cointegrated. This revealed a strong relationship among the variables though inflation rate and exchange rate show no long term relationship, but short term relationship seems to exist between them.

1

Acknowledgements We would like to express our gratitude to all those who gave us the possibility to complete this thesis. We want to thank the Department of Financial Economics for giving our opportunity to commence this program and the thesis in the first instance, to do the necessary research work. We are deeply indebted to my supervisor Bernd-Joachim Schuller (PhD) whose advice, stimulating suggestions and encouragement helped ours in all the time of research for and writing of this thesis. We thank almighty God, for sustaining us during the program, furthermore thanks to and all our lecturers, especially Hans Mörner and Max Zamanian (PhD) whose role as lecturers gave us enduring foundation. Finally thanks to our family members.

YOU MAY ALSO FIND THESE DOCUMENTS HELPFUL

...THE EFFECTS OF EXCHANGERATE IN INFLATION OUTPUT AND THE CURRENT ACCOUNT
ABSTRACT
The empirical studies on the effects of changes in exchangerates on inflation and real activity can be broadly divided into four categories:
Single-equation econometric methods,
Vector autoregressive (VAR) models,
Structural macro econometric models and
DSGE models - Dynamic stochastic general equilibrium....

...﻿Exchangerates are the value of one currency with respect to another, for the purpose of conversion. They affect investment levels, via the cash rate and values of domestic assets; trades, via prices and the terms of trade (TOT); liabilities, via currency appreciation or depreciation and the valuation effect, and trades. Exchangerates are influenced by government policies in the short term and market forces in the long...

...Buy Made In Nigeria Goods, Nigerians Urged
This article talks about Nigeria’s youth unemployment resulting to a loss in tax revenue, a decrease GDP, a decrease in consumption expenditure, a decrease in government spending due to a change in the economic or political priorities and a decrease in the domestic output which in turn affects the Aggregate demand (AD).
AD is the total quantity of goods and services that all buyers in an economy want to buy over a period of...

...The relationships between inflation and exchangerate
The existence of linkages between the level of the exchangerate and the rate of inflation has been more commonly established in the theoretical literature. Using this definition, we can show the link between inflation and exchangerates. What is exchangerate and what is...

...rish IIreland InflationRate
The inflationrate in Ireland was recorded at 1.20 percent in October of 2012. InflationRate in Ireland is reported by the Central Statistics Office Ireland. Historically, from 1976 until 2012, Ireland I.R averaged 5.3 Percent reaching an all time high of 23.2 Percent in October of 1981 and a record low of -6.6 Percent in October of 2009. In Ireland, the inflation...